THE WARREN BUFFETT WAY

THE WARREN BUFFETT WAY
Business Tenets
1. Is the business simple and understandable?
2. Does the business have a consistent operating history?
3. Does the business have favorable long-term prospects?
Management Tenets
4. Is management rational?
5. Is management candid with its shareholders?
6. Does management resist the institutional imperative?
Financial Tenets
7. What is the return on equity?
8. What are the company’s “owner earnings”?
9. What are the profit margins?
10. Has the company created at least one dollar of market
value for every dollar retained?
Value Tenets
11. What is the value of the company?
12. Can it be purchased at a significant discount to its value?

In evaluating people, you look for three qualities: integrity,
intelligence, and energy. If you don’t have the first, the other
two will kill you............................WARREN BUFFETT, 1993

FURTHER TIPS/METHODS WILL BE GIVEN TOMORROW.......

LET US ALL ENJOY TODAY AND WAIT FOR BEAUTIFUL TOMORROW....

SATBIR SINGH

PRESIDENT

JAB WE MET CA

REDEFINING PROFESSIONALISM........

Money Market

Money Market and its Instruments
Money Market: Money market means market where money or its equivalent can be traded.
Money is synonym of liquidity. Money market consists of financial institutions and dealers in
money or credit who wish to generate liquidity. It is better known as a place where large
institutions and government manage their short term cash needs. For generation of liquidity, short term borrowing and lending is done by these financial institutions and dealers. Money Market is part of financial market where instruments with high liquidity and very short term maturities are traded. Due to highly liquid nature of securities and their short term maturities, money market is treated as a safe place. Hence, money market is a market where short term obligations such as treasury bills, commercial papers and banker’s acceptances are bought and sold.
Benefits and functions of Money Market: Money markets exist to facilitate efficient transfer of short-term funds between holders and borrowers of cash assets. For the lender/investor, it provides a good return on their funds. For the borrower, it enables rapid and relatively inexpensive acquisition of cash to cover short-term liabilities. One of the primary functions of money market is to provide focal point for RBI’s intervention for influencing liquidity and general levels of interest rates in the economy. RBI being the main constituent in the money market aims at ensuring that liquidity and short term interest rates are consistent with the monetary policy objectives.
Money Market & Capital Market: Money Market is a place for short term lending and borrowing, typically within a year. It deals in short term debt financing and investments. On the other hand, Capital Market refers to stock market, which refers to trading in shares and bonds of companies on recognized stock exchanges. Individual players cannot invest in money market as the value of investments is large, on the other hand, in capital market, anybody can make investments through a broker. Stock Market is associated with high risk and high return as against money market which is more secure. Further, in case of money market, deals are transacted on phone or through electronic systems as against capital market where trading is through recognized stock exchanges.
Money Market Futures and Options: Active trading in money market futures and options
occurs on number of commodity exchanges. They function in the similar manner like any other
futures and options.
Money Market Instruments: Investment in money market is done through money market
instruments. Money market instrument meets short term requirements of the borrowers and
provides liquidity to the lenders. Common Money Market Instruments are as follows:
 T reasury Bills (T-Bills): Treasury Bills, one of the safest money market instruments, are
short term borrowing instruments of the Central Government of the Country issued through
the Central Bank (RBI in India). They are zero risk instruments, and hence the returns are not
so attractive. It is available both in primary market as well as secondary market. It is a
promise to pay a said sum after a specified period. T-bills are short-term securities that
mature in one year or less from their issue date. They are issued with three-month, six-month
and one-year maturity periods. The Central Government issues T- Bills at a price less than
their face value (par value). They are issued with a promise to pay full face value on maturity.
So, when the T-Bills mature, the government pays the holder its face value. The difference
between the purchase price and the maturity value is the interest income earned by the
purchaser of the instrument. T-Bills are issued through a bidding process at auctions. The bid
can be prepared either competitively or non-competitively. In the second type of bidding,
return required is not specified and the one determined at the auction is received on maturity.
Whereas, in case of competitive bidding, the return required on maturity is specified in the
bid. In case the return specified is too high then the T-Bill might not be issued to the bidder.
At present, the Government of India issues three types of treasury bills through auctions,
namely, 91-day, 182-day and 364-day. There are no treasury bills issued by State
Governments. Treasury bills are available for a minimum amount of Rs.25K and in its
multiples. While 91-day T-bills are auctioned every week on Wednesdays, 182-day and 364-
day T-bills are auctioned every alternate week on Wednesdays. The Reserve Bank of India
issues a quarterly calendar of T-bill auctions which is available at the Banks’ website. It also
announces the exact dates of auction, the amount to be auctioned and payment dates by
issuing press releases prior to every auction. Payment by allottees at the auction is required to
be made by debit to their/ custodian’s current account. T-bills auctions are held on the
Negotiated Dealing System (NDS) and the members electronically submit their bids on the
system. NDS is an electronic platform for facilitating dealing in Government Securities and
Money Market Instruments. RBI issues these instruments to absorb liquidity from the market
by contracting the money supply. In banking terms, this is called Reverse Repurchase
(Reverse Repo). On the other hand, when RBI purchases back these instruments at a specified
date mentioned at the time of transaction, liquidity is infused in the market. This is called
Repo (Repurchase) transaction.
continued tomorrow----
Topics of tomorrows will be

Repurchase Agreement
Commercial Papers

let us wait for beautiful tomorrow.......

SATBIR SINGH
JAB WE MET CA
REDEFINING PROFESSIONALISM.....
KHOO NA ZAYEE YEAH ........TARE ZAMNEE PAR.......

MOTIVATIONAL BOOK

THE MONK WHO SOLD HIS FERRAI

THIS IS A MUST READ BOOK FOR ALL THE PROFESSIONALS. THIS BOOK VERY BEAUTIFULLY EXPLAINS HOW A LAWYER GETS HEART ATTACK,LEAVES PRACTICE AND IDENTIFY THE TRUE MEANING OF LIFE . THE BOOK CONTAINS OF TIPS FOR SUCCESS WITHOUT HAVING ANY STRESS IN LIFE . IF YOU NEED A COPY OF IT ,MAIL TO ME AT casatbirgill@gmail.com

SATBIR SINGH

PRESIDENT

JAB WE MET CA

REDEFINING PROFESSIONALISM.......

IAS-2 (TECHNICAL SUMMARY)

Technical Summary

This extract has been prepared by IASC Foundation staff and has not been approved by the IASB. For the requirements reference must be made to International Financial Reporting Standards. IAS 2 Inventories
The objective of this Standard is to prescribe the accounting treatment for inventories. A primary issue in accounting for inventories is the amount of cost to be recognised as an asset and carried forward until the related revenues are recognised. This Standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realisable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.
Inventories shall be measured at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
The cost of inventories shall be assigned by using the first-in, first-out (FIFO) or weighted average cost formula. An entity shall use the same cost formula for all inventories having a similar nature and use to the entity. For inventories with a different nature or use, different cost formulas may be justified. However, the cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects shall be assigned by using specific identification of their individual costs.
When inventories are sold, the carrying amount of those inventories shall be recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories shall be recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, shall be recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

5 reasons why windfall profits tax is wrong

A day after Reliance Industries [Get Quote] chairman Mukesh Ambani met Prime Minister Manmohan Singh to forestall political attempts to throttle his oil refinery business, the petroleum ministry has come out with a detailed presentation to show that the demand for the windfall profits tax (WPT) on private oil companies is 'short-sighted populism' and 'bad economics.'
The ministry claims that WPT would neither help in reducing prices of petroleum products nor would it lead to any increase in output. WPT could lead to lower investment in the petroleum sector and undermine India's energy security, the presentation cautions.
Concerned that the WPT would make investment and production by the domestic oil companies more expensive, the ministry says these companies should be incentivised to go in for drilling and that any deterrent will slow down any research that could help make future energy in the country less expensive.
In a note, prepared in response to first the Left and now the Samajwadi Party leader Amar Singh's demand for windfall profits tax, the ministry has given five reasons why such a tax defies logic. These are:
* India is neither a major oil producer nor Indian companies have gained much from the rising global prices of oil. * The government is bound by the contract of the production sharing agreement as part of the NELP (New Exploration Licensing Policy). * As part of the profit sharing plan, the government is already a beneficiary of the rise in profits of oil companies, besides 35 per cent corporate tax on such profits. * WPT on the basis of revenues in discovered blocks ignores the huge risks, investments and poor chances of discoveries. * WPT will discourage long-term investments in oil industry.
The ministry points out that all over the world discerning opinion leaders see windfall profits tax as no more than a populist political tool designed to make people feel good.
The ministry's note asserted that the clamour in India for such a tax is based on the misleading logic that the rising prices of oil across the globe has helped the oil companies make profits far in excess of what they legitimately deserve.
What about the profit margins in other businesses during boom periods, the ministry asked, and

Put mobile payment services on hold-RBI

RBI asks banks to put mobile payment services on hold

In a significant decision, the Reserve Bank of India (RBI) has restrained banks in launching their mobile payment services for the time being. In a notification on Tuesday RBI said that all the banks, which have already started their mobile payment services, will have to suspend them till the issuance of final guidelines.
The RBI found that there are a number of attendant issues and therefore, has asked banks to keep on hold their mobile payment services till issuance of the final guidelines.Banks have been told that they may also dissociate themselves from any mobile based money transfer service which has not received explicit approval of RBI or not covered by any of the guidelines issued by the central bank, the central bank said.
The central bank observed that a few banks have already started offering mobile payment services to their customers without waiting for the release of RBI’s guidelines.
Recently, few banks like Standard Chartered, ICICI and Barclays have been seen offering mobile payment services.”While the RBI has no objection for use of mobile channel to provide basic services such as mobile alerts for credit or debit entry, balance enquiry etc, which are in the nature of providing information, due care needs to be taken for permitting the channel for customers to initiate payment instructions,” the RBI said in its statement issued on mobile payments in India - operating guidelines for banks, on Tuesday.
Speaking on this matter, an ICICI Bank spokesperson said, “As far as our mobile banking facility is concerned, the withdrawal of cash happens only through the branch banking and so, we adhere to all RBI regulations. Our mobile banking facilitates the money transfers across bank accounts.”
Meanwhile, the RBI is in the process of finalising the operative guidelines for banks on mobile payments. The draft guidelines were placed on the RBI website and a number of comments have been received.
The comments are being compiled and after evaluation of the comments, the final guidelines would be issued, the RBI said.

IMPORTANT & RECENT CUSTOME CASES

Customs - UNITED TELECOMS LTD. Versus COMMISSIONER OF CUSTOMS, BANGALORE = 2008

Date of Decision: July 14, 2006 - CESTAT, BANGALOREAppellant is seeking condonation of delay of 299 days in filing the appeal - due to various other commercial reasons, appellant didn’t file appeal but decide to pay the duty liability – changed view to file an appeal after a lapse of 299 days cannot be a reason to condone the delay – appellant has filed the appeal only to take advantage of subsequent judgments - no sufficient cause to condone - application suffers from lapse and negligence and hence the application is rejected
Customs - COMMISSIONER OF CUSTOMS, AMRITSAR Versus SHARMAN WOOLLEN MILLS = 2008

Date of Decision: October 11, 2006 - CESTAT, NEW DELHIIn this application, the Revenue has prayed to stay the operation of the impugned order of Commissioner (Appeals) and to pass such order or orders as may be deemed fit and proper in the interest of natural justice Rule 41 of CESTAT (Procedure) Rules, 1982 – held that Rule 41 relates to the orders of the Tribunal and not to those of authorities below - no prima facie case has been made out in Revenue’s favour - application filed by the Revenue merits no consideration

IF YOU NEED MORE CUSTOME CASE LAWS MAIL TO ME AT casatbirgill@gmail.com

SATBIR SINGH

PRESIDENT

JAB WE MET CA

REDEFINING PROFESSIONALISM.......

IMPORTANT & RECENT EXCISE CASES

Central Excise - Godrej Industries Ltd. Vs. D.G. Ahire Assistant Collector Of Central Excise & Another = 2008

Date of Decision: July 9, 2008 - SUPREME COURT Liquid hair dyes – classification - there was no specific entry relating to "hair dyes" under CET however, "hair lotion" is specified under Tariff Item 14F - Demand under Tariff Item 14F of the First Schedule to the Central Excise and Salt Act, 1944 – said product could not be treated as a lotion to be used as a scalp or hair nourisher or for medicinal purposes - appellant's preparation was poisonous and had to be used with great care – demand according to Tariff Item 14F was erroneous

Central Excise - OMEGA CABLES LTD. Versus DEPUTY COMMISSIONER, CHENNAI-II = 2008

Date of Decision: January 31, 2006 - HIGH COURT MADRASThere is an order of Tribunal, fixing the liability on the petitioner to pay the duty and when there is admittedly no stay against that order is passed, the first respondent (Revenue) is entitled to make a demand for payment of the duty - Such a demand is perfectly legal and the first respondent cannot be restrained from making the demand - The petitioner has not made out a case for issuing the writ

Central Excise - COMMISSIONER OF CENTRAL EXCISE, LUDHIANA Versus VALLABH STEEL LTD. = 2008

Date of Decision: August 7, 2006 - HIGH COURT OF PUNJAB & HARYANA Commissioner while accepting the abatement claim of the assessee recovery of demand & penalty was ordered – Tribunal quashed the demand & penalty - contention raised by Revenue that the Tribunal could not go into the issue which was not subject matter of the order appealed against, is totally misconceived & liable to be rejected - CBEC should look into the matter with regard to filing of appeals in the matters involving petty amount, as in the present case
Central Excise - RAYALASEEMA PAPER MILLS LTD. Versus COMMISSIONER OF C. EX., HYDERABAD-II = 2008

Date of Decision: December 7, 2005 - CESTAT, BANGALOREAction of the department of issuing SCN to initiate proceedings of penal provisions after the adjudication, is not sustainable in the eye of law - issue is also decided in a similar matter by the Calcutta (sic) imposition of penalty, once decided as held by the Calcutta High Court - Commissioner was bound by the said judgment yet he has not followed the same, which is not correct – SCN can’t be held legal hence penalty are not imposable

IF YOU NEED MORE SUMMARIES OF CENTRAL EXCISE CASES, MAIL TO ME AT casatbirgill@gmail.com

WITH REGARDS

SATBIR SINGH

PRESIDENT

JAB WE MET CA

REDEFINING PROFESSIONALISM.......

IMPORTANT INCOME TAX RECENT CASES

Income Tax - M/S DELHI INTER EXPORTS PVT LTD. versus THE COMMISSIONER OF INCOME TAX = 2008
Date of Decision: July 9, 2008 - HIGH COURT OF DELHI Tribunal is correct in law in holding that the assessee company, who is procuring export orders from the foreign buyers and passing on to the manufacturers or dealers is not entitled to weighted deductions u/s 35 B of Income Tax Act- in view of sub-section (1A) of 35B which is a non obstante provision, since the assessee is not engaged in the business of export of goods, the deductions cannot be allowed to the assessee – question is answered in favour of the revenue
Income Tax - S.K.BAHADUR versus UNION OF INDIA and OTHERS = 2008
Date of Decision: July 10, 2008 - HIGH COURT OF DELHI Appellant had raised the issue of jurisdiction in the writ petition and had made specific prayers with regard to the assessment proceedings - Tribunal disposed of the appellant’s pending appeals without a reference to the pleas raised by the appellant with regard to jurisdiction pursuant to the liberty granted by this Court – assessee’s submission that he may be permitted to withdraw the present appeals with liberty to approach the Tribunal for rectification u/s 254(2), is accepted
Income Tax - Commissioner of Income Tax, Delhi-VI Versus M/s Oriental Insurance Co. Ltd. = 2008
Date of Decision: July 18, 2008 - SURPEME COURT HC dismissed revenue appeal (against deletion of additions by tribunal) on ground that dept. can’t file appeal without getting clearance from Committee of Disputes (COD) & held that same has to be done within a month - action of dept. can’t be said illegal merely for delay in approaching to COD - order of HC is set aside & directed to consider the question of desirability to proceed in the matter before it on receipt of the report from COD - COD has to consider the matter on merits
Income Tax - C.K. Gangadharan & Anr. Versus Commissioner of Income Tax, Cochin
Decision: July 21, 2008 - SUPREME COURT Assessee takes the stand that the revenue acted mala fide in not preferring appeal in one case and filing the appeal in other case – assessee not established malafides of revenue – revenue contention that because of the small amount of revenue involved & because of revenue neutrality, no appeal is filed, is acceptable – held that merely because in some cases the revenue has not preferred appeal that does not operate as a bar for the revenue to prefer an appeal in another case

IF YOU NEED MORE SUMMARIES OF INCOME TAX CASE LAW JUST MAIL TO ME AT casatbirgill@gmail.com
WITH REGARDS
SATBIR SINGH
PRESIDENT
JAB WE MET CA

RECENT SERVICE TAX CASE LAWS

Service Tax - R.B. AGENCIES Versus COMMISSIONER OF CENTRAL EXCISE,

Date of Decision: July 3, 2007 - CESTAT, BANGALOREAppellants merely purchase SIM cards and recharge coupons from BSNL and sell the same for a profit - It is also seen that Sales Tax Authorities are proceeding against the similarly situated parties for payment of Sales Tax - Bench had already taken a view that the appellants do not render any service but simply sell the goods - Therefore, they would not be liable to pay Service Tax under the category of “Business Auxiliary Services” – assessee’s appeal allowed

Service Tax - HINDUSTAN CONSTRUCTION CO. LTD. Versus COMMR. OF C. EX., COIMBATORE = 2008

Date of Decision: April 30, 2008 - CESTAT, CHENNAIAgreement involved HCCL undertaking work of engineering design as well as construction of Water Treatment and Distribution Project (TWP) - HCCL did not render engineering consultancy to client - Therefore the impugned amount of service tax paid as Consulting Engineer by assessee (HCCL) was not due to be paid – refund of same is allowed
Service Tax - CCE, COIMBATORE Versus COIMBATORE KANARAGA LORRY URIMAIYALARGAL NALA TRUST

Date of Decision: May 2, 2008 - CESTAT, CHENNAIActivity of sale of petroleum products by appellants on behalf of Bharat Petroleum Corporation Ltd.- respondents claim itself to be a Trust functioning without profit motive – appellate authority held that the Trust was not a commercial concern & hence exempted from tax under Business Auxiliary Service - provisions of Trust Deed require to be examined for the purpose of determining as to whether the respondents can be treated as a commercial concern – matter remanded for de novo adjudication
Service Tax - R. SUKUMAR Versus COMMR. OF C. EX., TRICHY = 2008

Date of Decision: March 11, 2008 - CESTAT, CHENNAIInvestigation report did not indicate mens rea or contumacious conduct on the part of the assessee to evade service tax - appellant paid the tax due along with interest before issue of the Show Cause Notice - penalty can be imposed under Section 78 only if a service provider has evaded payment of duty by fraud, wilful suppression, collusion etc. - instant case is a fit one to grant relief provided under Section 80 – assessee’s appeal allowed
Service Tax - COMMR. OF C. EX., BELGAUM Versus PRATIK AGENCIES = 2008

Date of Decision: April 10, 2008 - CESTAT, BANGALORECommissioner (A) hold reimbursable amounts are not to be included for calculating the service tax - service tax is only on the Commission received for C&F agency services - Comm. (A) remanded the matter to Original Authority to examine the claim of the appellants in the light of the evidences to be produced – order of comm..(A) is correct – since assessee made entire position clear to dept. about paying tax excluding the reimbursable amount, larger period not invocable – dept. appeal dismissed
Service Tax - SANDEEP SOBTI Versus COMMR. OF C. EX., MEERUT = 2008

Date of Decision: April 2, 2008 - CESTAT, NEW DELHISCN issued proposing demand under Rent-a-cab Scheme Operator – Assessee not replied SCN - demand confirmed by original authority vide its ex parte order – assessee contends that running buses on hire shall not come under Rent-a-cab Scheme Operator - orders of the lower authorities is set aside & matter remanded to the Original Authority – Dept. is also directed to check up the factual position from the RTO authorities regarding category/type of the vehicles used by the appellant
Service Tax - SHEWALKAR HOTELS Versus COMMR. OF C. EX., NAGPUR = 2008

Date of Decision: April 28, 2008 - CESTAT, MUMBAIIssue is regarding the amount received by the applicant from the Franchiser as rent – revenue alleged that assessee has sold goods from his premises so duty is payable under Business auxiliary services - It is seen from the records that the agreement is franchisee agreement - application for waiver of pre-deposit of the amounts is allowed and recovery thereof stayed

GOLDEN QUOTES

Ego provides the soul with all the ingredients of unpopularity.